New Mexico official slashes requested electric rate increase

A New Mexico hearing examiner has recommended cutting a rate increase requested by an electric utility by about two-thirds.

The Public Service Co. of New Mexico sought an increase of $123.5 million a year, but Public Regulation Commission hearing examiner Carolyn Glick on Thursday recommended an increase of only $41.3 million.

The commission will vote on the recommendation later this year.

PNM's request would have meant a rate increase of nearly 16 percent for residential customers.

According to Glick's recommendation, her plan would result in a 6.4 percent rate increase for the average customer. A typical residential customer in Albuquerque or Santa Fe would likely see a 7.24 percent increase.

Glick's recommendation would save PNM customers about $300 million, said Mariel Nanasi, executive director of the advocacy group New Energy Economy.

PNM's president and chief operating officer said the recommendation is unreasonable. In a news release, President Pat Vincent Collawn said her company plans to "file strong exceptions with the commission."

According to Collawn, the rate increase was requested to cover PNM's $655 million investment in its system since 2011 to improve safety, reliability, affordability and environmental responsibility.

She said PNM is "deeply disappointed with the hearing examiner's recommendation, as it does not represent a fair balance between the interests of customers and shareholders."

Nanasi said experts testifying for her group found that "PNM did not provide any analysis to demonstrate cost-effectiveness or prudence" of its $152.8 million purchase of 64.1 megawatts of power at the Palo Verde Nuclear Generating Station in Arizona. Glick agreed that PNM couldn't demonstrate that it was a cost-effective choice.

But Glick also wrote that New Energy Economy didn't provide any evidence that a 15-year, $580 million coal contract purchased by PNM was unreasonably expensive.

If Glick's recommendation is accepted, it will be the second year in a row that a PNM rate increase failed.